The Spanish government is abolishing VAT for basic necessities

Faced with steep price increases, the Spanish government has just announced the abolition of VAT on food products such as bread, milk, cheese, fruit, vegetables or cereals.

Spain’s left-wing government announced on December 27 the abolition of VAT on basic consumer goods, as well as a 200-euro aid to the poorest families, to compensate for the sharp rise in prices.

The announcements are part of a series of new measures worth €10 billion.

0% VAT for “basic needs”.

This brings to 45 billion euros the total amount of government measures this year to help Spaniards cope with a burst of inflation, Socialist Prime Minister Pedro Sánchez said at a press conference at the end of the year.

These new measures are related to food products, which reached 15.3% year-on-year growth in November.

For the next six months, VAT will drop from 4% to 0% for all basic necessities such as bread, milk, cheese, fruit, vegetables or cereals, Pedro Sánchez added. VAT on oil and pasta products will be reduced from 10% to 5%.

Assistance of 200 euros to low-income families

Another shock measure adopted at the last Council of Ministers of the year on Tuesday morning is the establishment of a “€200 grant” for families with incomes of less than or equal to €27,000 a year. rising food prices”.

On the other hand, the 20 cents per liter fuel discount that all motorists currently enjoy will be reserved from January 1 for the sectors “most affected” by inflation, namely transporters, farmers, maritime companies and fishermen. Sanchez said again.

Since Russia’s invasion of Ukraine on February 24, the Spanish government has stepped up aid to curb inflation spreading across Europe.

After reaching 10.8% in July, which reached the highest level in the last 38 years, inflation gradually decreased to 6.8% in November.

But this reduction does not affect the food sector, whose prices continue to rise.

“Too late and insufficient”

While the measures taken by the executive branch during the year ended on December 31, the government was supposed to decide this week on their possible continuation.

Pedro Sánchez thus announced the extension of the VAT rate reduction to 5% for electricity and gas for another six months. Likewise, the shutdown of essential services for the most vulnerable who cannot pay their bills will remain prohibited in 2023.

In housing, Pedro Sánchez announced that the 2% limit on rent increases, which is normally adjusted annually by an amount equal to inflation, will be extended for an additional year. And transfers are suspended for the next six months.

This was the demand of the radical left party Podemos, a partner of the Socialists in the government coalition.

In the same way, the reduction of fares in urban public transport is maintained for the whole of 2023.

the end of the “for all” fuel discount

On the other hand, the discount of 20 cents per liter of fuel, currently enjoyed by all motorists, will be preserved from January 1 for the sectors “most affected” by inflation, namely transporters, farmers, sailors and fishermen. said Pedro Sánchez.

These events are taking place in a very tense political environment, less than a year after the next general election, which will be held no later than December 2023.

They immediately drew criticism from the main opposition party, the People’s Party (PP, conservative right).

Regarding this aid, General Secretary of PP Cuca Gamarra said “It is late and insufficient”.

Pedro Sánchez anticipated these criticisms by asserting, with the support of a graph, that “Spain has reduced inflation like no other European country”.

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